tv Nightly Business Report PBS October 4, 2012 6:30pm-7:00pm PDT
>> this is nbr. captioning sponsored by wpbt >> tom: i'm tom hudson. president obama and mitt romney are back on the campaign trail, but still debating taxes. >> susie: i'm susie gharib. the feds launch one of the largest crackdowns on medicare fraud. $430 million in scams leads to arrests from coast to coast. >> tom: and we'll introduce you to a company hoping to become the mcdonald's for healthy eaters. >> susie: that and more tonight on nbr! >> tom: it was right back to the campaign trail today for president obama and mitt romney. the president went on the attack after what's been perceived as a lackluster debate performance. and the president accused
governor romney of not telling americans the truth about what president obama calls romney's $5 trillion tax plan. darren gersh, tonight, looks at what the real impact of the romney tax plan could be on the american economy. >> reporter: here's where the president gets that $5 trillion number he used again today. governor romney's plan to cut tax rates by 20% would add up to about $5 trillion over ten years, assuming no other changes. but governor romney is planning to make other changes by eliminating tax deductions worth about the same amount. but the president is accurate when he says governor romney is making many promises in his tax plan. romney says upper-income people will not get a net tax cut; middle-income people will not see their taxes go up; incentives for savings and investment won't be touched; the estate tax and alternative minimum tax will be eliminated-- all this while cutting tax rates and not changing the amount of money the federal government brings in. an analysis by the tax policy
center shows governor romney will have to make some big tradeoffs. >> so, governor romney has made five promises. he can't keep them all. he is going to have to, at some point, abandon one of those promises. he cannot cut tax rates, cut taxes on the middle class, cut taxes on capital gains, and balance the budget all at once. >> reporter: romney advisers have said they would consider eliminating tax breaks on at least two forms of saving, life insurance and muni bonds. and the governor's supporters argue tax cuts generate enough growth to offset some of their cost. >> people can have reasonable disagreements about the magnitude of that growth effect, but to assume that it is zero, i think, is wrong. and once you relax that assumption, then, all of a sudden, other things start to be possible. >> reporter: but it's hard to be sure about the impact of tax cuts on the economy, which is why the experts in congress and the treasury who are responsible
for estimating the cost of tax changes generally ignore the impact of tax reforms on the entire economy. darren gersh, nbr, washington. >> susie: here on wall street, traders and investors were taking a fresh look at stock sectors today, assessing what a romney or obama win would mean for the markets. also a lot of talk about minutes from the latest federal reserve meeting, and word that policymakers are considering numerical targets for unemployment as a guide for fed policy action. by the closing bell, the dow added about 81 points, the nasdaq rose 14, and a ten point gain on the s&p. joining us now to talk about all this, art hogan, managing director and strategist at lazard capital markets. you know on the floor a lot of the traders were calling this a romney raleigh. others say there were other factors, what were the message of the markets today? >> well, i tell you this, i think romney had a big part in this. the other piece was that the-- they came out and pretty positive commentary
about what they are going to do about their monetary policy but if you look at how sectors mover today we saw a romney affect as you look at health care sectors and the hospitals in particular. >> susie: exactly there were some stock sectors that responded to what the candidate said in the debate last night. you talk about health-care stocks. let's take a look. there was a lot of criticism by romney of the obama health-care program, so we saw hospital stocks like tenet and ata fall by 2%, humana up there, and looking at health insurers like billionpoint also responding on the upside so what were you telling your clients today what to do with the health care stocks? >> well, one of the things we've been tracking as the corelation between health-care stocks in general and the possibility of obama winning a re-election versus romney, the challenger coming in and wing. and what happens is there is a divergence. health care in general tends to do okay if people think romney is going to be
re-elected and that is overall. but health care really breaks down to the service providers like the hospitals. which would actually severely benefit quite a bit if obama care continued on as planned. but if we had someone like romney come and take over and you know do what he says to get rid of obama care the folks who provide service are certainly going to be adversely affected. the folks that provide insurance are going to be positively affected. we saw that effect today. it was very marked. >> susie: let's look at another sector because romney was talking a lot about how much he likes coal, both candidates mr. talking about energy independence and you look at how coal stocks did today, big gains there like arch coal, like alpha natural resources, is this a good place to put your money? >> well, i tell you this. it's early to be making bets on any sector and predicated against a presidential election. it is too close to call and certainly not the way you want to invest but i will tell you as we get closer and you feel more confident in the results of an election, i will tell you energy stocks in general,
coal stocks in particular are certainly going to be a good investment. we'll unleash the power of the energy complex of the united states, become energy independence. there will be a lot of winners in the energy complex f there is a change in administration. >> real quickly, jobs was another big topic last night. we have the jobs report coming out tomorrow. it is expected the unemployment rate is going to go a little bit over 8%. what impact will that have on our markets tomorrow and on the election? >> it's amazing this is probably one of the last ones we get to focus on before election. there will be one more before november 2 but as we look at tomorrow's jobs reports it could go either way it is hard for this no to-- number to disappoint the market because we already have monetary policies, i think an upside number would be better for the president, the downside better for the challenger. so we will keep a close eye on that. >> susie: all right that number comes out at 8:30 eastern time tomorrow morning. we'll see what happens. art hoggan, managing director and strategist at lazard capital managements >> reporter: i'm erika miller in new york. there are 12.5 million people in america who are out of work, but still ahead, i'll introduce you
to two new york city firms that can't hire workers fast enough. >> tom: the federal government made what it called one of the largest medicare fraud crackdowns today, arresting dozens of people across seven cities, accusing them of cheating medicare out of $430 million. today's busts involved 91 people, including doctors, nurses, and hospital administrators, including these arrests in miami. among the scams-- the president of riverside general hospital in houston and his son are accused of giving medicare patients food and cigarettes for claiming to get hospital care, but instead watched tv or played games. federal prosecutors said that scheme led to $158 million in fake bills. today's action, announced by the justice department, stretched from brooklyn to los angeles. >> this is something i think we see at a variety of levels. we see it among people who are health care professionals who take oaths to provide care and
do no harm, and in fact they are doing great harm. we are going after people, whatever their positions, whatever their levels, to make sure we hold them accountable. >> gary can trell is the deputy inspector general for investigation at health and human services with us from our washington, d.c. bureau. how sophisticated were these schemes that the government alleged today? >> today's schemes involved the gamut from straight up fraud to very sophisticated schemes involving sometimes the provision of services that are simply masked as legitimate services. and sometimes billed at rates that are higher than the services that were delivered. and in many cases not necessary services. so that the schemes run the gamut across the country this time. >> 430 million dollars in all, what hopes are there to recover any of that money? >> well, we certainly are taking steps to recover that money. in many cases we issued payment suspensions, for example to stop any additional money from going
out the door. in some situations we've actually frozen assets in order to await a judicial action to seize and forfeit those funds. so we are hopeful we will get much of that money back. >> one case involves five people, 67 million in phony mental health services. there's 100 million accusation of fake home health-care services. one doctor accused of signing 33,000 prescriptions for 2,000 patients. how come the accused fraud gets to those big numbers before it gets to the point that we saw today. >> what you see in those types of schemes are providers who are massacre aiding as legitimate provider, in some cases as i said providing some level of service but the necessity of those services are sometimes nonexistent. and so they are billing for services that do not need to be provided. and some cases they're not providing those services but these scheme conditions hard to detect. we've actually become more and more reliant upon data
analytics to identify schemes such as these and unravel these more complicated fraud schemes using data. >> this is a big data. we talk about big data a lot when it comes to the for profit area but governments using it here. what you can point to as safeguards that have been put into place to protect and prevent fraud like this? >> well, we are certainly using big data to identify fraud as early in the process as possible. we're moving away from the old model of pay and chase, towards a model of prevention and detection and progress so we're stopping these schemes earlier on. and we're also, you know, the centers for medicare and medicaid services are taking steps to remove bad providers from the program and stop them from getting in the program before they start billing the medicare program. >> hundreds of billions of dollars at stake every year. hundreds of million accused today in the fraud bust. we've got gary cantrell with us, deputy
>> susie: american consumers took a breather from shopping in september. the nation's retailers reported modest sales gains after back- to-school shopping wound down. the gap and t.j. maxx were the big winners; sales jumped 6%. macy's and target also posted solid gains, up 2% or more, but below analyst estimates. target also said it will stop reporting monthly sales numbers next year. the big disappointment-- kohl's, reporting a 2.7% decline, way below wall street estimates.
gold prices sparkled to an 11- month high today as investors can't seem to get enough of the yellow metal. word that europe's central bank opted today to keep interest rates super-low helped push gold higher. december gold futures tacked on more than $16 an ounce to close at $1,796.50. 1,800 bucks an ounce is a key psychological resistance point for the precious metal. suzanne pratt takes a look at whether gold will cross through it. >> reporter: guess what's on the move again? you got it-- gold. gold futures are closing in on
$1,800 an ounce, a gain of 14% this year alone and close to gold's all-time high of 1924. traders at the new york mercantile exchange credit fed chairman ben bernanke and his renewed push to keep u.s. interest rates ultra low for the run-up in gold. >> the fact that they're going to flood with more, more money is a very good sign for gold, and that's kind of what's propelled us to here. >> reporter: as for where prices are headed next? if the u.s. economic environment remains relatively slow, traders predict new highs for the precious metal could come in the first half of next year. that's if gold is able to break through certain technical levels. >> i think if we can get above $1,816. we should see 19 and a quarter. if we can get above $1,925, then $2,000 is definitely in our sights. >> reporter: experts say one thing that could push gold
prices above $2,000 an ounce this year is if president obama is re-elected. the thinking-- the president will keep bernanke employed, which means interest rates stay very, very low. suzanne pratt, nbr, new york. >> tom: stocks moved higher ahead of tomorrow's report on the september job market. the s&p 500 really gained momentum just after 10:00 a.m. eastern time after the commerce department released its report on september factory orders. while total orders were down, it wasn't as bad as feared. the index finished higher by seven tenths of a percent. trading volume held steady on the big board-- 672 million shares. it was just under 1.6 billion on the nasdaq. financials and materials were two strongest stock sectors, up 1.5% and 1.3%, respectively. the energy sector recovered some of what it had lost earlier this week, rebounding 1%.
bank of america and j.p. morgan were among those financial stocks fueling the gains and helping move the dow jones industrial average to its best gain in three weeks. bank of america gained 3.3% on heavy volume. this is b-of-a's highest price since mid-september. j.p. morgan rallied 2.4% to its highest close since early may. j.p. morgan is due to report third-quarter earnings a week from tomorrow. the third quarter earnings season unofficially begins on tuesday when alcoa reports its results. and there were buyers today ahead of that news. it was one of the biggest percentage gainers of the dow, moving up 3.3%. the stock shrugged off an analyst at j.p. morgan cutting earnings estimates for alcoa. the analyst pointed to weaker aluminum prices during the quarter. meantime, steel maker u.s. steel saw a small rebound in its share price, up 4.4%. but it's been a tough year for shareholders as the steel business has been hit by price cuts and weaker demand. u.s. steel is down 25% this year. global cement mixer cemex did
something it hasn't done since early 2009-- it is talking publicly about its financial future, expecting sales to show a small increase in the third quarter. as a building supply company, cemex was hit hard during the credit crunch. but shares have been rallying, hitting a 52-week high with today's 4.8% rally. the financial forecast came thanks to cemex selling bonds, marking its return to the corporate debt market. the tech sector was among the weakest areas of the market. software maker informatica is feeling the slowdown in europe, warning earnings and revenues will be less than expected when it reports its quarterly results. the warning rattled investors, slashing 22.6% from its stock, falling to a new 52-week low. volume was more than ten times normal. medical technology firm nuvasive also warned its third quarter revenue will be disappointing. the stock fell 32.9%. nuvasive makes implants and devices for spinal surgeries. it said it lost customers to competitors. mimicking what we saw in the broader market, the financial sector e.t.f. saw the biggest gains among the five most
actively traded exchange traded products. it was up 1.5%. four of the five most actively traded products were stronger. and that's tonight's "market focus." >> susie: all this week, we have been highlighting the need for job retraining. today, we look at a slightly different problem facing many high-tech start-ups. in spite of the weak economy, there are many firms that cannot fill positions. erika miller went to one soho building where firms gripe they can't hire as fast as they want. >> i've been working here for 221 hours. >> reporter: keith blanchard is
one of the newest hires at thrillist, a media company targeting young, hip, urban men. three million subscribers get a daily email with recommended places to eat, drink, and have fun. >> i'm here because this is just a fantastic place, full of smart people, really motivated and just moving the needle on what the future can be. >> reporter: the soho-based firm was co-founded seven years ago by ben lerer. the firm nearly doubled in size this year to 215 employees and counting. there are openings for engineers, social media gurus, merchandisers, salespeople.. videographers, and more. so why, in this weak job market, are there so many open positions? >> there are plenty of people with the right experience, but we have a very specific sort of work hard/play hard culture here that is really right for some people and really not for others. >> reporter: it's not just thrillist that's eager to hire. in this one office building alone, there are half a dozen other tech start-ups in the same situation.
zocdoc is a free online service that allows patients to find doctors who accept their insurance and book appointments instantly. they can even fill out medical forms electronically before their visit. in five years, zocdoc has grown to over 300 people. founder and c.e.o. cyrus massoumi wishes there were more. >> the one limiting factor to our growth is finding more great people. so, it's incredibly hard. i spend nearly half my time recruiting. >> reporter: to woo potential hires, zocdoc offers free healthcare for employees and their family, catered lunch every day, flex time, and unlimited vacation. those perks were only part of what attracted new hire blair baumwell. >> i was looking at the web site, i was actually booking an appointment of my own, and saw that they were hiring. so, i thought, "hey, why don't i look at it? because i worked in the healthcare industry, i'm really passionate about it." >> reporter: unfortunately for these firms, the search for software engineers and other high skilled workers is not likely to get easier. >> for many years, we haven't
been graduating enough of these people. and it's a sad story that we haven't adjusted, or we don't create an educational system that really signals to students and provides them incentives and information that this is where the jobs are. >> reporter: but thrillist and zocdoc aren't giving up, doing all they can to attract workers and make them feel at home. erika miller, nbr, new york. >> tom: tomorrow on nbr, we'll continue our job retraining coverage with a look at goodwill industries. it's the nation's largest non- profit dedicated to training workers and finding them jobs. and speaking of jobs, tomorrow, the government's monthly jobs report is out-- what it could mean for investors and the presidential election. >> susie: healthy food may soon be coming to a corner near you. two former mcdonald's executives launched lyfe kitchen last year in palo alto, california. now, they plan to take the
restaurant and "it's good for you" menu nationwide. diane eastabrook has more. >> reporter: lyfe kitchen opened in the heart of silicon valley a year ago. lyfe, an acronym for "love your food everyday," serves up burgers, fish tacos, breakfast sandwiches, salads, even organic beer. yet nothing on the menu is over 600 calories it's the brainchild of two former mcdonald's executives and an investment banker. they've rolled out frozen lyfe meals, and next week break ground on a second store near los angeles. in his chicago office today, co- founder michael donahue told me there will be a lot more to lyfe. >> we're looking at new york, we're looking in chicago, and we're looking at a few other major markets. if i put the map on the wall, you could pick them. >> reporter: obviously, in california, you have people who are more health conscious, so this kind of idea would sell very well there. but can it sell in the midwest? can it sell in the east coast? can it sell in the south? >> we believe 100%. at the end of the day, we want
to go where you mitigate risk, where the people are open-minded to it, and we believe there are pockets of it in every location and every city in america. but when you start a new concept, go where you believe it's going to be the most successful and you mitigate some of that risk. >> reporter: now, you're looking to source locally, correct? >> correct. >> reporter: how difficult is it to do that? it sounds very expensive. >> you have to look at the etymology, the beginning of trends, and when the consumer starts to change-- and all of the pressure is on locally grown. they don't want as many preservatives, they don't want chemicals, they don't want things of this nature, the marketplace will follow. funny thing about the marketplace-- it follows consumers, and we believe we are. >> reporter: you have rolled out in costco in california. will you be rolling your food out at all costco stores? >> that is the plan. can i announce something to you? we have not announced it
directly, but we are now national in retail. you can now go on lyfe kitchen, "lyfe"-- "love your food everyday"-- and go on amazon.com and get your food delivered to your house. >> reporter: what did you learn at mcdonald's that you are applying to this business? >> we learned a little bit about taste. you know, it's got to taste good, number one. number two, we learned you got to serve a lot of people quickly. we have a complicated menu, as you look at that art's fried chicken, tal's ancient grain bowl, it's not easy. so we have to literally come up with systems and processes to make that experience great in restaurant number one, restaurant number two, chicago, new york, arizona, wherever we go. so, it's about systems and processes, and the people that did it. we want to do for the brussel sprouts what others did for other products. >> reporter: are you looking to do for healthy food what mcdonald's did for the cheeseburger?
>> can we call it great tasting food? can we say we want to do for great tasting good-for-you, food what a lot of chains did for a lot of other products. >> reporter: mike, good luck to you. >> thank you, diane. appreciate it. >> tom: finally, the ripple effect of regulations. high frequency trading isn't just for stocks anymore; it's getting more popular in the bond market, too. with tonight's commentary, here's tracy alloway with the "financial times." >> in the past four years, we've seen a host of new regulation aimed at curbing the risky activities that helped fuel the financial crisis. that's leading to massive adjustments in banks' business models, and nowhere is that change more apparent than in the world of corporate bond trading. time was that such bond trading was practically synonymous with wall street. we've all seen images of high- flying bond dealers glued to their phones, taking orders from customers. but new rules aimed at strengthening the financial system also make it more expensive for banks to hold vast inventories of bonds on their balance sheets.
without those inventories, bond dealers' ability to trade corporate debt on behalf of clients is much reduced. to deal with these new developments, banks are beginning to build electronic bond trading platforms, hoping they'll do for bonds what electronic trading did for stocks some ten years ago-- make it cheaper and easier to trade. time will tell whether that will work for the banks, or be good for the financial system. for now, it's a time of intense adjustment for wall street, and a period of massive uncertainty for big banks as well as the companies and investors that do business with them. i'm tracy alloway. >> tom: that's "nightly business report" for thursday, october 4. good night. >> susie: good night, tom. thanks for watching, everyone. we'll see you online at nbr.com and right back here tomorrow night. captioning sponsored by wpbt